LONDON (Alliance News) - The FTSE 100 and FTSE 250 indexes have fallen in the wake of George Osborne's 2014 UK budget, with annuity providers and the traditional betting companies coming under pressure after a shake up of pension rules and a rise in gaming machine duties.
The FTSE 100 is down 0.3% at 6,582.60, the FTSE 250 is down 0.1% at 16,338.90, and the AIM All-Share is up 0.1% at 868.07.
Osborne's announcement that the tax on fixed-odds betting terminals will be raised to 25%, while bingo duty will be halved to 10%, has seen William Hill plummet 8.2% and Ladbrokes fall almost 15%, while Rank Group is up 5.3% after management siezed on the bingo duty cut to immediately announce three new bingo clubs.
Hargreaves Lansdown now leads the FTSE 100 gainers, up 5.0%, after Osborne said the ISA saving limit will rise to GBP15,000, from GBP11,520, and will be fully transferable between cash and stocks. As one of the biggest providers of private client ISA's, Hargreaves Lansdown seems set to benefit from this change, although analyst suggest that the actual tax gain from the increase to the cash ISA limit at current best buy rates is just GBP30.
In a major shake up to the UK's pension system, the chancellor scrapped compulsory annuities, allowing people more freedom to do what they want with their pension pots. Almost 5% has been wiped off the FTSE 350 life insurance sector since the announcement as insurers lose the guarantee on that particular income stream. Partnership Assurance, which was already a big faller after reporting a decline in new business earlier Wednesday, leads the sector lower, down a massive 35%. Legal & General has plummeted to the bottom of the FTSE 100, down almost 14%, with Aviva also down 7.5%.
The pound, which had been rallying into the budget announcement following stronger than expected unemployment numbers in the morning, has softened a little against the dollar, despite the Office for Budget Responsibility increasing its UK growth forecasts. Sterling is still a little higher against the dollar over the session, currently trading at USD1.6610.
The OBR increased its 2014 UK growth forecast to 2.7%, from its November forecast of 2.4%. Osborne proudly pointed out that it was the biggest positive revision to growth forecasts in 30 years. The OBR forecasts 2.3% growth in 2015, followed by 2.6% in 2016. The chancellor also said that the OBR now expects the UK to be in a position of budget surplus by the 2018/19 financial year.
The gold price is continuing to fall, now trading at a six-day low of USD 1,339.60 per ounce, as investors continue to lighten up on the safe haven asset.
The focus will shift to the latest FOMC announcements after the European equity market close. Ahead of the announcement US stocks are mixed, with the DJIA and the S&P 500 both up about 0.1%, and the Nasdaq Composite down 0.1%.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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